It's important to check the flexibility of the mortgage provider you choose - it can make a vital difference to financial comfort at the beginning or during the life of the mortgage, when your personal circumstances may change. There are a host of mortgage options which have been developed directly in response to the needs of first-time buyers.
Among the many options available are:
- Deferred start mortgages, where the lender may consent to postponing mortgage repayments for one, two or three months at the start of the mortgage. This is added to the capital loan balance over the remaining years and may not be a good idea in the long term as you are repaying interest on interest.
- Interest only mortgages for up to 12 months for first time buyers building their own home.
Other choices available include:
Taking a break from repayments for a 6 month period. A repayment break referred to as a (Moratorium ) or Interest Only repayments gives you the opportunity to take a break from your mortgage repayments for up to 6 months or reduce your repayments to Interest Only for a maximum of 12 months. These options can be useful for certain family/lifestyle events such as education fees, maternity leave, or home property improvements.
The Payment Break are available on your Private Dwelling House) subject to approval from the lender
- On a ‘Moratorium’ repayment break you are not required by the lender to repay anything towards the capital or interest for an agreed period of up to 6 months.
- Where you should choose an Interest Only Payment Break you are required to pay ‘interest only ‘on your mortgage for an agreed period of up to 12 months. The capital or principal balance will remain the same.
When the Moratorium or Interest Only period ends, your monthly repayments are added to your capital balance over the remaining term and your mortgage repayments increase to ensure that your mortgage will be repaid (together with interest due) within its original term.
Other flexible options are as follows …
- You can increase your repayments by a set amount each month ( referred to as accelerated repayments ) thereby reducing the amount of interest payable as you are paying off your mortgage balance sooner.
- Arranging an agreed additional payment each month while on a variable rate mortgage reducing the term and total interest payments over your mortgage.
- Paying off capital lump sums ( referred to as a partial redemption ) when additional cash is available.
Lender’s policies on the above can vary so please speak to our consultant for further information.